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Indiana Withholding: What you need to know

Indiana income tax regulations require all employers in the state that withhold federal income tax to withhold state income taxes from resident and nonresident employees who perform services in Indiana.
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Employers required by the Internal Revenue Service to withhold income tax on wages must register with the Indiana Department of Revenue (DOR) as a Withholding Agent by filing a Business Tax Application (BT-1). A BT-1 may be filed online. Once registered, an employer will receive an Indiana Taxpayer Identification Number.
As a result of an agreement with some other states, Indiana employers are not required to withhold Indiana state taxes from wages paid to residents of Kentucky, Michigan, Ohio, Pennsylvania, and Wisconsin. This exemption does not apply to county withholding. Employees must submit Form WH-47 certifying their state of residency to the employer.
Every employer that withholds wages under the state income tax law is also required to withhold the appropriate county adjusted gross income tax.
Taxes must be withheld on all payments to employees that are subject to federal withholding, including wages, salaries, commissions, tips, bonuses, fringe benefits, cafeteria plan benefits, and supplemental unemployment benefits.
Exception. Dependent care assistance and contributions to deferred compensation plans are not subject to withholding.
Withholding rates. Departmental of Revenue (DOR) Notice #1 explains how to withhold taxes on employees. The current state withholding tax rate is 3.4 percent. The county tax rate will depend on where the employee resided as of January 1. If the county is a nontaxing county or the employee is working in Indiana but does not reside ...

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Indiana Withholding Resources

Withholding Products

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